Ann Dugan once heard someone describe going to a U.S. school as the financial equivalent of “driving a Lexus off a cliff once a year.” Turned out her three kids wanted to do their four-year degrees at small U.S. colleges, which was costly, but, she says, worth it.
“Small, liberal arts colleges are something we don’t have in Canada,” says Dugan, a Bostonian, now living in Toronto, who briefly went to Oberlin College, a small school in Ohio. (Her husband, Paul, who’s from Montreal, did a stint at Princeton). “At big schools you can be in a lecture with 3,000 other kids and have no contact with your professors. You can get lost.”
There are many reasons a Canadian would want to go to a U.S. school – more choice, potentially more prestigious – but in most cases, an elite school in the U.S. will cost between $35,000 and $55,000 a year.
Because of their background, she always thought U.S. schools would be a possibility, so Dugan, a former journalist, and Paul, an investment banker, started putting money away for education when the kids were small. “We’re savers,” says Dugan. Each child needed about US$50,000 a year to cover tuition, plus more for residence and meal plans. (Williams College in Massachusetts, where her eldest went, posts a 2018-19 tuition rate of US$55,140 plus US$14,500 for room and board.)
That’s a lot of education dollars, but people make it work. About 27,000 Canadian young adults go to the U.S. for post-secondary education – plus thousands more dual citizens like Dugan’s children. People afford it thanks to their ability to save smartly and pick the right school.
Cut back the cost
There are many reasons a Canadian would want to go to a U.S. school – more choice, potentially more prestigious – but in most cases, an elite school in the U.S. will cost between $35,000 and $55,000 a year, says Jenika Heim, an EducationUSA advisor who consults with Canadian who want to study in the U.S.
Fortunately, there are many ways to pay less, she says. Along with academic and athletic scholarships, some schools have needs-based financial aid. Ivy League schools are particularly generous with low-income students, though households making over $150,000 must pay Harvard’s entire $67,580 for tuition, room and board.
Many schools also have cross-border tuition agreements, so Ontario residents, for instance, can attend Wayne State University in Detroit for about $6,500, the same as a resident of Michigan. The same happens at North Dakota schools for Saskatchewan residents, says Heim.
Students may apply for money from provincial loan programs, such as the Ontario Student Assistance Program (OSAP), but there are limits to those funds, says Heim and you may need more money to afford your chosen program.
Whether you’re spending money on university in Canada or the U.S. a registered education savings plan (RESP) may be an ideal way to grow school-related savings on a tax-deferred basis. You can also get a Canada Education Savings Grant of up to $500 a year and, for lower income earners, a Canada Learning Bond that can add an additional $2,000 over the life of an RESP.
Canadians can use any money saved in an RESP for U.S. colleges, but there is a catch: in order to use the grants and bonds, the student must still be considered a resident of Canada for tax purposes, says Todd Sigurdson, Director, Tax and Estate Planning at Investors Group.
In many cases if a child comes back to Canada for the summer to work or live then they will still be considered a resident of Canada. If they stay in the U.S. for the summer, they could become a non-resident, which would then impact their ability to get the government top ups. “They need to ensure they understand the residency issues and their particular residency status so there are no surprises when it comes time to use their RESPs to assist with their educational expenses,” he says.
Count on extras
Take into account travel costs for a few trips home during the year. It could cost the same as a student studying in a different Canadian province, or even less to places like Florida can be affordable depending on where in Canada you live. Exchange fees and currency fluctuations can erode your education savings, which is why Dugan has savings in U.S. dollars.
As well, while university only lasts for four years, don’t forget about graduate and professional degrees. Dugan is happy the costly U.S. education experience is almost over for her family, but knows any one of her three kids might want to study more – and she’d support that. “It’s foreseeable that they’ll go back,” she says.